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Legal Precedence Supports Right to Prove Vendor Functionality


Our company recently was contracted by a customer to execute an upgrade of their Tier-1 transportation planning system that they originally implemented back in 2006. As part of the initial project planning and justification, we collaborated on which pieces of functionality the customer would ideally take advantage of within the latest version of the software; these included:

  • Hub and Pool Point Route Optimization
  • Web-based Carrier Tender and Accept
  • Continuous Move Route Optimization
  • Freight Audit Payment and Claims

Ironically, the functionality needs in the latest version were on the customer’s original functionality list back in 2006, yet were not implemented for a variety of reasons:

  • Functionality could never be configured to work as documented by the vendor, even with the vendor’s participation.
  • Functionality was rigidly programmed by the vendor and did not allow for flexible use by the customer
  • Advanced functionality not able to be implemented because pre-requisite functionality did not work.

Given the challenges of the initial implementation, our team recommended that we execute a proof of concept on the latest version of the software as a milestone step in the upgrade process; this would take approximately three weeks to setup and execute. If the proof of concept did not show the required functionality the project could be stopped. The client also collaborated with the vendor on the proper version of their software that would support their required functionality.

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Fast forward two months and the proof of concept never occurred. The functionality required by the customer and verified with the vendor that is operational still did not work. A Tier-1 software vendor that boasts investing $20M in R&D on their existing products now has not had working functionality documented as being supported by their software in over five years. Two of the four critical pieces of functionality communicated by the customer had known bugs and had never been implemented by a client. The software vendor even submitted billable hour invoices to the customer for their role in the project.

Lesson learned: as a customer, you are well within your right to take your software vendor to task on documented functionality. Reference the verdict handed down this week by a jury in the state of Texas awarding approximately $248M in damages to Dillards against software vendor JDA because the vendor failed to meet obligations to Dillards regarding two products the customer has been using for over ten years under a software license agreement and services agreement for which the customer had paid the vendor $8M.
You can read more about the JDA lawsuit here.

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